City mulling health insurance options as Kaiser rates increase

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Health insurance provider Kaiser covers more than 40,000 employees of the city of San Francisco.

San Francisco is threatening to dump Kaiser Permanente to force the health insurance provider to cough up details behind medical expenses and to lower costs after hitting The City with a more than 5 percent rate increase.

That means costs would increase to $322.8 million annually, of which workers would pay $27.2 million and The City $295.6 million.

Labor leaders and members of the Board of Supervisors are weighing legal and political options as they run up against deadlines to vote on Kaiser's 2014 health rates for more than 40,000 city workers.

"It sure doesn't sit right with me given the profits rising by Kaiser and the services declining," Supervisor Eric Mar said.

For months, the Health Service System board, which administers health benefits for active and retired city workers, has attempted to bring down Kaiser's rates and demanded information to justify the increase. Kaiser officials have refused to hand over data, saying the information is proprietary.

"Do I think that the rates I have today are fair? The answer is yes, I think the rates are fair," said Andrew See, Kaiser's vice president of actuarial service.

The Board of Supervisors must approve the rates, which takes nine of 11 possible votes.

Some labor members are telling board members to reject the cost increase and deal with the consequences.

"Draw the line here and tell them that you will not go forward until they open up the window and show us what they are doing," said Tom Moore, a member of San Francisco's largest labor union, Service Employees International Union Local 1021, which represents more than 13,000 city workers and more than 2,000 nonprofit workers.

When Supervisor Mark Farrell warned Moore of the implications, Moore said: "I'm a Kaiser member. I'm a Kaiser patient. I'm a Kaiser heart patient and a Kaiser cancer patient. And I'm willing to have the doors shut."

Health Service System acting Director Lisa Ghotbi advised supervisors to approve the rates and said she has begun working with Kaiser on 2015 rates while "concurrently pursuing cost-competitive alternatives to Kaiser."

She said if the board rejects the rates and opts to go without Kaiser, it could be "devastating medically" for workers.

Farrell, who chairs the board's budget committee, said he will schedule a hearing on the rate proposal for next week. Mar said in the interim he wanted Kaiser to cough up the data to justify the cost increases.